On October 19, 2017, S&P Global Ratings lowered its corporate credit rating on Charming Charlie, LLC to CCC from CCC+ and its $150 million senior secured term loan rating to CCC from CCC+. According to S&P Global, the downgrade reflects the expectation that weak operating trends will persist over the next 12 months, resulting in the Company’s continued dependence on its revolver for liquidity needs. Based on S&P’s forecast, they expect the cushion of compliance under the Company’s total leverage and interest coverage covenant ratios to tighten and believe this could lead to a covenant breach in 2018. S&P also believes that the risks of a distressed debt transaction to address the capital structure are elevating as 2019 maturities approach, performance remains soft and the broader retail sector remains under pressure. Read more on distressed companies.
About Kerry Mastroianni
Kerry Mastroianni, the editor of The Distressed Company Alert, has been researching distressed and bankrupt companies for over 18 years. As a 10-year employee of New Generation Research, she is also a data editor for Bankruptcy Week and the editor for our annual Bankruptcy Yearbook & Almanac. Prior to Kerry’s employment at NGR, she worked for eight years as a research analyst for KPMG’s corporate recovery practice.